Small businesses: new tribunal rules don't go far enough

The Government's plans to make it simpler to employ people has already provoked vociferous debate - but small businesses say the rules need to go further.

by Emma Haslett

Published: 28 Jan 2011

Last Updated: 18 Feb 2011

Stage one of the Coalition’s big drive on jobs got properly underway yesterday, when the Department for Business released new proposals to encourage businesses to create jobs. The plan is to make it easier (or less scary) for employers to take on new people by cutting down on the number of tribunals being brought forward (which stood at 236,000 last year – 56% more than the year before). The proposals included measures to charge a fee to workers (although it hasn’t been decided how much that fee would be) to make a claim, as well as extending the time period before which employees can sue for unfair dismissal to two years, rather than one. Seems like a positive step – but what do businesses make of it?

At a time when the Government urgently needs the businesses to shore up jobs after rafts of redundancies in the public sector, keeping them onside should be fairly high up the Coalition’s agenda. And happily, there’s a definite sentiment among businesses that any move to make employing people easier is a good one. ‘We strongly welcome the reforms,’ says the BCC’s David Frost. ‘The current system wastes time and money, and distracts employers from growing their businesses.’

Business owners agree. Ken Day has come up against two tribunal claims in the 20-odd years he’s run his acrylics manufacturing business, K2, and says the measures are encouraging. ‘I think any step forward has got to be good – we’ve reached a stage where people don’t have anything to lose by throwing in a case,’ he says. ‘We’re always being told that people need to be protected from companies – but companies need to be protected from people, too.’

But Day adds that the proposals could go further to make bringing a tribunal more difficult. Charging a fee to bring forward a case, for instance, isn’t enough. ‘I wouldn’t make [claimants] pay a fee, I’d make them pay the other side’s costs. As an employer, you’re in a no-win situation. Even if you do win the tribunal, you’ve got to pay your costs. If they lose, they haven’t lost anything, because they’ve got the no-win, no-fee lawyers. But we have to defend ourselves – we have no choice. Win or lose, we’re going to lose.’

And although many of them welcome the plans, that’s a sentiment that’s echoed by many business organisations. Steve Radley, of manufacturer’s organisation the EEF, says if the Government wants to create more jobs, it’s going to ‘require far more radical action’ than the proposals set out. And there’s also doubt that extending the time under which employees are prevented from claiming unfair dismissal is going to change much. The threshold has actually already been moved four times since the 1970s, and, as IES director Nigel Meager points out, ‘any competent employer is going to be able to make a decision about a new employee’s performance within a year of hiring them.’

So it’s now up to the Government to decide whether the proposals will come to anything or, as Day puts it, ‘pay lip-service to the issue’. ‘It sounds good, but whether it turns out to be good is another matter,’ he points out. Watch this space.